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In 1957, The "Sumatran Rat-Monkey" is a hybrid creature that, "according to legend", resulted from the rape of tree monkeys on Skull Island by plague-carrying rats. Stewart McAlden (Bill Ralston), an explorer returning from the depths of the island with his team, is carrying a rat-monkey in a cage and is stopped by fierce warrior natives that demand the return of the monkey. They escape to a waiting jeep, but Stewart gets bitten by the Rat-Monkey. Seeing the mark of the monkey's bite on his right hand, Stewart's men hold down the explorer and amputate it. A bite mark is then seen on his left arm, which results in the removal of that limb. Finally, they see a set of bloody scratches on Stewart's forehead and kill him. The captured rat-monkey is shipped to Wellington Zoo in New Zealand.

Sometime later, Lionel Cosgrove (Timothy Balme) lives with his domineering mother, Vera (Elizabeth Moody). To Vera's dismay, Lionel falls in love with a shopkeeper's daughter, Paquita María Sánchez (Diana Peñalver). While snooping on the two during a visit to the zoo, Vera is bitten by the rat-monkey. The animal's bite turns her into a ravenous zombie. Lionel tries keeping her locked in the basement while simultaneously trying to maintain his relationship with the oblivious Paquita. Vera escapes and is hit by a tram.

As the townspeople assume she is dead, Lionel tranquilizes the zombie for her funeral. After she is buried, he returns to the graveyard to administer more anesthetic, but is accosted by a gang of hoodlums. Vera bursts from her grave, resulting in more deaths and zombies. As their numbers grow, Lionel manages to keep the zombies under relative control with repeated injections, and tries keeping them concealed in his home. However, Lionel's uncle Les (Ian Watkin) arrives to wrangle with Lionel over Vera's estate. Les discovers the "corpses" and blackmails his nephew into giving up his inheritance in return for his silence.

Lionel reluctantly administers poison to the zombies ("killing" them), and buries them just as Les and his friends arrive for a housewarming party. However, the poison turns out to be an animal stimulant; and since the zombies came from the bite of an animal, it gives them more energy. The zombies burst from the ground to attack the party guests. Lionel goes into a room where he saw Paquita fighting with Les, and informs them of the zombie outbreak. Les escapes through a window while Lionel pulls out a large hanger with clothes, which distracts the zombies and gives Paquita a chance to escape. Les later goes into the basement, where he encounters Vera, who has turned into a giant zombie. She kills Les.

Lionel kills most of the zombies with a running lawnmower. The group are now fighting with dozens of zombies, animated intestines and spinal cords, severed heads and disembodied legs. During the conflict an open gas pipe ignites, setting the house ablaze. Lionel manages to kill all of the zombies, until Vera, who has become a hyper-oestroegenised gargantuan monster with a grossly distorted head and spine and huge breasts, pursues Lionel and Paquita to the rooftop. Paquita is left hanging onto the edge of the roof while Lionel confronts his mother.

Lionel declares that he is no longer afraid of Vera and she opens her womb, engulfing Lionel, declaring that he is "such a good boy" and that "none will ever love you as much as your mother". Vera then tries to kill Paquita by removing her hands from the roof. Lionel cuts his way out of his mother's body, causing her to fall into the burning house. Lionel and Paquita escape the building and walk away arm-in-arm as the fire department arrives.

The final scene to be shot was the section in the park with Lionel and the zombie baby Selwyn. The film was finished one week ahead of schedule and with NZ$45,000 remaining, so Jackson used all this remaining budget to film the park scene over the course of two days. He has gone on to say that this is his favourite scene and the funniest in the whole film.

The film was subject to a lawsuit: In Bradley v WingNut Films Ltd [1993] 1 NZLR 415, it was alleged that the comedy horror film Braindead had infringed the privacy of the plaintiffs by containing pictures of the plaintiff's family tombstone. After reviewing the New Zealand judicial authorities on privacy, Gallen J stated: "the present situation in New Zealand ... is that there are three strong statements in the High Court in favour of the existence of such a tort in this country and an acceptance by the Court of Appeal that the concept is at least arguable." This case became one of a series of cases which contributed to the introduction of tort invasions of privacy in New Zealand.[2]

In some nations, such as the United Kingdom and Australia, the 103-minute film was shown in full.

In countries where the censors balked at the extreme gore, the film was initially banned or left unrated before being heavily cut. In Germany, a 94-minute version was seen with major cuts to some of the film's grislier scenes, but was widely ignored. A FSK 16 rated version was released in Germany under the American title Dead Alive, omitting almost the entirety of the violence. The uncut version is banned in Germany, though it is still widely available, also under the American title Dead Alive.

In the United States, where the film was released as Dead Alive (because of another film with rights to the practically identical title Brain Dead), the R-rated version is only 85 minutes with most of the gore scenes removed, while the unrated cut is 97 minutes with the gore scenes mostly intact. The USA 97-minute version is Jackson's preferred version[citation needed], as he was given the opportunity to "apply some additional spit and polish" to it.

Although Braindead did not receive much critical attention at the time of its release, Jackson's fame with The Lord of the Rings led to more interest in his earlier films. The contemporary response to the film was positive: the film received an 86% rating of positive reviews based on 28 reviews on Rotten Tomatoes. The website's consensus is: "The delightfully gonzo tale of a lovestruck teen and his zombified mother, Dead Alive is extremely gory and exceedingly good fun, thanks to Peter Jackson's affection for the tastelessly sublime."[3] However the film only has a score of 54 out of 100 on Metacritic based on 7 reviews.[4]

At the time of its release, David Stratton of Variety gave a positive review, calling it "Jackson's best film to date" and praising its humour, acting, and technical qualities (gore effects, makeup). He stated "Kiwi gore specialist Peter Jackson, who goes for broke with an orgy of bad taste and splatter humor. Some will recoil from the gore, but Braindead wasn't made for them."[5]

In the early 2010s, Time Out conducted a poll with several authors, directors, actors and critics who have worked within the horror genre to vote for their top horror films.[6]Braindead placed at number 99 on their top 100 list.[7]

Simon Pegg, actor, comedian, and friend of Jackson, wrote in his 2012 book Nerd Do Well: A Small Boy's Journey to Becoming a Big Kid that the film Braindead is one of the main influences on his 2004 zombie film Shaun of the Dead.

In Jackson's 2005 version of King Kong, the cargo hold of the ship contains a box reading Sumatran Rat Monkey—Beware the bite!, in reference to the eponymous animal from Braindead.[9]

In the video game Left 4 Dead (2008), a room can be found (in the Blood Harvest campaign) containing an upturned lawnmower with a rope attached and a considerable amount of blood, referencing a particularly gory scene from Braindead.